HP to Buy EDS; Expect Massive ReOrganization at HP

I was reporting this rumor on my blog last week. This will be a massive reorg for the computer giant HP. HP being a major player in the services business will buy EDS. Impact: massive reorg of the existing services organization. Remember the failed attempt by iCarly who tried to buy PriceWaterhouseCoopers to bolster the services offering to counter IBM. Question is will this deal be the same massive integration job as experienced with the Compaq deal. Unlike iCarly, Mark Hurd had the chops to pull this off. Word within HP is that Mark is in touch with the operational machinery of HP and has the respect of his management.

Rob Hof reports “With the big exception of that pretexting scandal in 2006, Hewlett-Packard has kept a remarkably low profile under CEO Mark Hurd. That may be about to change shortly, as the Wall Street Journal reports HP is close to a deal to buy Electronic Data Systems. (UPDATE: HP just reported it’s in talks but said an agreement hasn’t been reached yet.) At about $12 billion to $13 billion, or a 30% premium to EDS’s stock as of Friday’s close, the deal would be HP’s largest since the much-debated $20 billion Compaq purchase in 2002 under former CEO Carly Fiorina.”

This is a big blow to the existing services business at HP. Here is the spin from HP…. A deal would bolster Hewlett-Packard’s competitive position versus rival International Business Machines Corp. (IBM) as a provider of services such as tech consulting and customer support. The transaction could spark further large deals in the technology sector as cash rich, mature companies such as Hewlett-Packard look to acquisitions for growth.

These mega mergers just don’t seem to make sense when you see the massive integration. I could be years for an organization like HP to digest the culture of EDS. If HP and Mark Hurd can pull it off it will be a coup.